Question

Scott is deciding which type of toilet paper to buy. There are two varieties of toilet paper- a regular size (R) and a jumbo size (J) that has four times as many sheets per roll. Assume that Scott’s preferences for the two varieties can be expressed by the utility function U=1/4 R+J. (4 points each) Graph Scott’s indifference curves for U = 1 and U = 2 with R on the x-axis. What is Scott’s marginal rate of substitution of regulars for jumbos, 〖MRS〗_RJ? How does this relate to the indifference curves you graphed in (a)? Suppose the price of a regular roll is $0.10 and the price of a jumbo roll is $0.20. Will Scott buy regular rolls, jumbo rolls, or some of each? (Hint: you don’t need to know Scott’s income to answer this!)

Answer 1